Just accepted a role outside IR35 - nervouse but excited

[meetpomo]

Hey guys, I think i've hit the holy grail - but I need some basic advice.

After about 10 years in employment and 6 months of running on my own, I finally have a contract for at least 18 months - a role outside IR35 and offering a decent day rate.

The New Role:
1. Role is outside IR35
2. I will be paid weekly - timesheet based via a company - they take a comission weekly from the employer - so when I work - they get paid as well and I dont pay them anything extra for the role
3. The role is available for 18 months

My responsibilities:
1. I will have to take out contractors insurance circa about 5k per annum
2. Responsible for all PPE for the role
3. Responsible for all IT equipment - I have this already
4. I have a set of roles and responsibilities I am comfortabel taking on

Financial Arrangements
1. Company will pay direclty into my business bank account
2. I am companies house and VAT registered for the business
3. I currently also sell equipment through my companies house - which doesnt take a lot of my time and is managed
4. All my accouning is done through Quickbooks Online and submit quarterly VAT returns on goods I buy and sell for a profit

Questions:
1. I will be doing a fair amount of mileage - the mileage will be captured and accounted for using quick books at standard mileage rate - this is my personal car I use for business use - is there anything I need to be aware of legally?
2. I intend to raise invoices (without VAT) on my quickbooks and reconcile my transactions without VAT - therefore it does not reportable for VAT return - it this ok? I will not be issuing invoices to my company as the management company will already do this and are responsible for it. They are not expecting a VAT invoice from my either.
3. I intend to do all future purchases required for my business use through my companies house - this include sustenance, entertaining, fuel, IT equipment, tools and even some subcontractors to manage some of my projects while I am working for this role
3. I intend to then do a monthly payroll for the minimum I need for my expenses as I want the business to keep growing finanically - I am aiming to cut down on my tax payable. As the company is registered as a Ltd and not a sole trader, would I be liable for the higher tax band when I take out funds?
4. Is there anything I can do to cut down on my taxes but still being compliant
5. I currently have a mortgage as my main property, but will be hiring out a workshop/office space under companies house - Is there anything I need to be aware off?

Keen to see what people think and to let me know what I need to be aware off when I start this role end of this month.

[cojak]

Yes. BE ABSOLUTELY SURE THAT IT IS OUTSIDE, AND REMAINS OUTSIDE IR35.

[hobnob]

Financial Arrangements
2. I am companies house and VAT registered for the business

Questions:
1. I will be doing a fair amount of mileage - the mileage will be captured and accounted for using quick books at standard mileage rate - this is my personal car I use for business use - is there anything I need to be aware of legally?
2. I intend to raise invoices (without VAT) on my quickbooks and reconcile my transactions without VAT - therefore it does not reportable for VAT return - it this ok? I will not be issuing invoices to my company as the management company will already do this and are responsible for it. They are not expecting a VAT invoice from my either.

Regarding mileage, make sure that your car insurance covers business travel.

If your company is VAT registered then you have to add VAT to your invoices, i.e. you have to charge VAT to the management company. (Assuming that they're also VAT registered, this shouldn't be a problem for them.)

3. I intend to do all future purchases required for my business use through my companies house - this include sustenance, entertaining, fuel, IT equipment, tools and even some subcontractors to manage some of my projects while I am working for this role
3. I intend to then do a monthly payroll for the minimum I need for my expenses as I want the business to keep growing finanically - I am aiming to cut down on my tax payable. As the company is registered as a Ltd and not a sole trader, would I be liable for the higher tax band when I take out funds?

Just as a minor point, you listed "3" twice

You need to be clear about the distinction between the company's money and your money. Similarly, the company will pay corporation tax while you will pay income tax and dividend tax. Can you be more specific about your question?

[malvolio]

...snip...

Questions:
1. I will be doing a fair amount of mileage - the mileage will be captured and accounted for using quick books at standard mileage rate - this is my personal car I use for business use - is there anything I need to be aware of legally?

Not really, other than getting business insurance for it (not expensive but necessary). You can claim 45p a mile to cover all costs from YourCo (although most cars cost around 65ppm these days...).

2. I intend to raise invoices (without VAT) on my quickbooks and reconcile my transactions without VAT - therefore it does not reportable for VAT return - it this ok? I will not be issuing invoices to my company as the management company will already do this and are responsible for it. They are not expecting a VAT invoice from my either.

If you raise an invoice - even a virtual one to keep your records straight - you must add VAT. The logic is you are providing a service to the management company and that is what VAT is charged against. So I'm not totally convinced your approach is correct or even legal. Speak to an accountant.

3. I intend to do all future purchases required for my business use through my companies house - this include sustenance, entertaining, fuel, IT equipment, tools and even some subcontractors to manage some of my projects while I am working for this role

Not a problem. I use a company credit card for all business expenses, so they never go near my personal bank account.

3. I intend to then do a monthly payroll for the minimum I need for my expenses as I want the business to keep growing finanically - I am aiming to cut down on my tax payable. As the company is registered as a Ltd and not a sole trader, would I be liable for the higher tax band when I take out funds?

If you receive income - salary or dividends - HMRC will treat it as salary and will expect all normal taxes to apply. You don't have to take a salary or pay yourself, of course, but if you do then taxes are due. Don't try and get around that, it would be a very bad idea.

4. Is there anything I can do to cut down on my taxes but still being compliant

Yes. don't earn anything...

5. I currently have a mortgage as my main property, but will be hiring out a workshop/office space under companies house - Is there anything I need to be aware off?

You seem to be missing the absolutely critical bit of awareness here. You and YourCo are two entirely separate legal persons. If you look at YourCo in the same was as you do Tescos, the boundary between whose money pays for what will be a lot clearer. And read up on Benefit in Kind rules...


No doubt some of the better qualified guys around here will add their contribution. Meanwhile, why have you got two question 3s...?

[Eirikur]

Why don't you register for VAT, you say you will drive a lot and you can also claim back VAT from mileage (besides all other cost such as meals, computer, hotels, phone etc)

[meetpomo]

Yes. BE ABSOLUTELY SURE THAT IT IS OUTSIDE, AND REMAINS OUTSIDE IR35.

Yes, my terms of engagement states outside IR35 and nothing else. The project will go on for at least 18 months

[meetpomo]

Regarding mileage, make sure that your car insurance covers business travel.

If your company is VAT registered then you have to add VAT to your invoices, i.e. you have to charge VAT to the management company. (Assuming that they're also VAT registered, this shouldn't be a problem for them.)



Just as a minor point, you listed "3" twice

You need to be clear about the distinction between the company's money and your money. Similarly, the company will pay corporation tax while you will pay income tax and dividend tax. Can you be more specific about your question?

Sorry should have been clear and apologies for the typo!

Basically I do a lot of R&D for new products and introduce them into the market, I just want to make sure that I can reserve capital for purchases I need to make when I develop these products rather than paying tax. I am totally distinguishing my monies from company monies here - i need to take a salary obviously for my expenses but also want to make sure that I have money set aside within my company bank account for future purchases for R&D projects.

[meetpomo]

Not really, other than getting business insurance for it (not expensive but necessary). You can claim 45p a mile to cover all costs from YourCo (although most cars cost around 65ppm these days...).


If you raise an invoice - even a virtual one to keep your records straight - you must add VAT. The logic is you are providing a service to the management company and that is what VAT is charged against. So I'm not totally convinced your approach is correct or even legal. Speak to an accountant.


Not a problem. I use a company credit card for all business expenses, so they never go near my personal bank account.


If you receive income - salary or dividends - HMRC will treat it as salary and will expect all normal taxes to apply. You don't have to take a salary or pay yourself, of course, but if you do then taxes are due. Don't try and get around that, it would be a very bad idea.


Yes. don't earn anything...


You seem to be missing the absolutely critical bit of awareness here. You and YourCo are two entirely separate legal persons. If you look at YourCo in the same was as you do Tescos, the boundary between whose money pays for what will be a lot clearer. And read up on Benefit in Kind rules...


No doubt some of the better qualified guys around here will add their contribution. Meanwhile, why have you got two question 3s...?

if i use funds obtained from this contract role for other projects that are under the same company or same limited company; can I do this - this can be R&D or customer projects?

Is my incomings from this particular contract (outside IR35) and incomings from other services (product i normally sell online) meant to be treated separately? Or does it all come into one pot.

[Whorty]

You need an accountant, not random strangers on an internet forum. You need to get this right and at the moment you sound very confused.

For example, your invoices must include VAT if you are VAT registered.

[vetran]

Turnover over £85k you have no choice but to register. If you don't expect to to turn over more for what you are doing I would be surprised.

https://www.gov.uk/vat-registration/...%20voluntarily.

Once registered most issued invoices have to contain vat sounds like yours should. IANAA

https://www.gov.uk/vat-record-keeping/vat-invoices

The Vat men have been doing it for a long time they like using their powers if they are suspicious don't upset them.